AMERICAN EXPRESS BANKING CORP. · Act,1949 read with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013

AMERICAN EXPRESS BANKING CORP.INDIA BRANCH

(INCORPORATED IN THE UNITED STATES OF AMERICA)

June 28, 2014 vol xlIX nos 26 & 27 EPW Economic & Political Weekly184

INDEPENDENT AUDITORS’ REPORT

To The Chief Executive Officer of American Express Banking Corp. – India Branch

Report on the Financial Statements

1. We have audited the accompanying financial statements of American Express Banking Corp. – India Branch (the “Bank”), which comprise the Balance Sheet as at March 31, 2014 and the Profit and Loss Account and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management’s Responsibility for the Financial Statements

2. The Bank’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with provisions of Section 29 of the Banking Regulation Act,1949 read with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and circulars and guidelines issued by the Reserve Bank of India from time to time as applicable to banks. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Bank’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion .

Opinion

6. In our opinion, and to the best of our information and according to the explanations given to us, the accompanying financial statements together with the notes thereon give the information required by provisions of section 29 of the Banking Regulation Act,1949 read with the Companies Act,1956, in the manner so required and circulars and guidelines issued by the Reserve Bank of India and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2014;

(b) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Other Matter

7. The financial statements of the Bank as at March 31, 2013 and for the year then ended were audited by another firm of chartered accountants who, vide their report dated June 3, 2013 expressed an unmodified opinion on those financial statements.

Report on Other Legal and Regulatory Requirements

8. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report have been drawn up in accordance with the provisions of section 29 of the Banking Regulation Act,1949 read with section 211 of the Companies Act, 1956.

9. As required by section 227(3) of the Companies Act, 1956 and section 30 of the Banking Regulation Act, 1949 we report that:

a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit;

b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank;



Economic & Political Weekly EPW June 28, 2014 vol xlIX nos 26 & 27 185

c) Since the Bank has only one branch, the question on reporting the number of branches audited by us and manner of audit thereon does not arise;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 , to the extent they are consistent with the accounting policies prescribed by the Reserve Bank of India;

e) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

f) In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books; and

g) the requirements of section 274(1)(g) of the Companies Act,1956 are not applicable to the Bank considering it is a branch of American Express Banking Corp. which is incorporated with limited liability in the United States of America.

For Price Waterhouse Firm Registration Number: 012754N Chartered Accountants

Sd/- Sharad Vasant

Place : Mumbai PartnerDate : June 9, 2014 Membership Number: 101119

Gurgaon June 6, 2014




BALANCE SHEET AS AT MARCH 31, 2014 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014

Year ended Year ended Schedule March 31, March 31, 2014 2013

INCOME Interest Earned 13 1,054,227 885,896 Other Income 14 6,536,855 5,673,152 Total 7,591,082 6,559,048 EXPENDITURE Interest Expended 15 1,260,678 1,173,322 Operating Expenses 16 6,389,109 5,699,543 Provisions and Contingencies 17 856,105 413,609 Total 8,505,892 7,286,474 PROFIT / (LOSS)Net Profit /(Loss) for the Year (914,810) (727,426)Profit / (Loss) brought forward (2,048,806) (1,321,380) (2,963,616) (2,048,806)

APPROPRIATIONS Transfer to Statutory Reserve – –Transfer to Other Reserves – – Transfer to Government/ proposed dividend – – Balance carried over to Balance Sheet (2,963,616) (2,048,806) (2,963,616) (2,048,806)Significant Accounting Policies and Notes to Financial Statements 18 The schedules referred above form an integral part of the Profit and Loss Account.This is the Profit and Loss Account referred to in our Report of even date.

As on As on Schedule March 31, March 31, 2014 2013

CAPITAL AND LIABILITIESCapital 1 7,527,444 7,527,444 Reserves and Surplus 2 76,810 76,810 Deposits 3 6,880,577 6,746,788 Borrowings 4 9,937,580 4,715,492 Other Liabilities and Provisions 5 8,338,116 6,335,234 Total 32,760,527 25,401,768 ASSETS Cash and Balances with Reserve Bank of India 6 660,697 490,697 Balances with Banks and Money at Call and Short Notice 7 882,127 269,328 Investments 8 5,332,740 3,909,014 Advances 9 21,229,948 17,103,192 Fixed Assets 10 454,127 431,947 Other Assets 11 4,200,888 3,197,590 Total 32,760,527 25,401,768

Contingent Liabilities 12 46,425 43,408 Bills for Collection – –Significant Accounting Policies and Notes to Financial Statements 18 The schedules referred above form an integral part of the Balance Sheet.

This is the Balance Sheet referred to in our Report of even date.

(Amount in Rs. ‘000) (Amount in Rs. ‘000)

For Price Waterhouse For and on behalf of Firm Registration Number 012754N American Express Banking Corp.- India Branch Chartered Accountants Sd/- Sd/- Sharad Vasant Manoj Adlakha Partner Interim Chief Executive Officer Membership No. 101119 Sd/- Neeshant Upadhya Financial Controller Place: Mumbai Place: Gurgaon Date: June 9, 2014 Date: June 6, 2014




CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2014 (Amount in Rs. ‘000)

Year ended Year ended March 31, 2014 March 31, 2013

Cash Flow from Operating activities Net profit/(loss) before taxes (596,304) (879,939) Adjustments for : Provision for doubtful advances and receivables (25,951) 82,929 Depreciation on assets 167,576 160,704 Net (profit)/loss on sale of land, building and other assets (4,342) (4,077) Operatingprofitbeforeworkingcapitalchanges (459,021) (640,383) (Increase)/decrease in investments (1,423,726) (496,595) (Increase)/decrease in advances (4,084,617) (2,430,381) Increase/(decrease) in deposits 133,789 1,733,627 (Increase)/decrease in other assets (406,259) (305,712) Increase/(decrease) in other liabilities and provisions 1,986,577 1,883,940 (Total taxes paid)/Refund received [net] (618) (588) A Net Cash Flow from/(used in) operating activities (4,253,875) (256,092) Cash Flow from Investing activities Fixed assets purchased (222,402) (233,387) Proceeds from sale of fixed assets 36,988 26,650 B Net Cash Flow from/(used in) Investing activities (185,414) (206,737) Cash Flow from Financing activities Infusion of capital - 1,350,250 Short Term borrowings 3,972,088 (917,258) Subordinate Debt 1,250,000 - Long term borrowing - - C Net Cash Flow from Financing activities 5,222,088 432,992 Net Increase/(Decrease) in cash and cash equivalents (A+B+C) 782,799 (29,837) Cash and cash equivalents at beginning of year 760,025 789,862 Cash and cash equivalents at end of year 1,542,824 760,025 Increase/(decrease) in cash and cash equivalents 782,799 (29,837) Notes to the Cash Flow Statement 1. Cash and cash equivalents represents cash and balances with banks as disclosed in Schedule 6 and 7 2. The above Cash Flow Statement has been prepared under the “Indirect method” as set out in the Accounting Standard (AS-3) on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

This is the Cash Flow Statement referred to in our Report of even date.






As on As on March 31, March 31, 2014 2013

SCHEDULE 1 – CAPITAL Amount of deposit kept with RBI under section 11 (2) of the Banking Regulation Act, 1949 as per contra. 78,810 78,810 78,810 78,810 HEAD OFFICE ACCOUNT Opening balance 7,527,444 6,177,194 Additions during the year – 1,350,250 Closing balance 7,527,444 7,527,444 SCHEDULE 2 – RESERVES AND SURPLUS I. STATUTORY RESERVES Opening balance 76,810 76,810 Additions during the year – – Closing balance 76,810 76,810 II. CAPITAL RESERVES Opening balance – – Additions during the year – – Closing balance – – III. SHARE PREMIUM Opening balance – – Additions during the year – – Closing balance – – IV. REVENUE AND OTHER RESERVES Opening balance – – Additions during the year – – Closing balance – – V Balance of Profit and Loss Account – – 76,810 76,810

SCHEDULE 3 - DEPOSITS A. In India I. DEMAND DEPOSITS From banks – – From others – –

II. SAVINGS BANK DEPOSITS – – III. TERM DEPOSITS From banks – – From others (Institutional) 6,880,577 6,746,788

6,880,577 6,746,788B. (i) Deposits of branches in India 6,880,577 6,746,788 (ii) Deposits of branches outside India – – 6,880,577 6,746,788

SCHEDULESFORMINGPARTOFFINANCIALSTATEMENTSFORTHEYEARENDEDMARCH31, 2014


SCHEDULE 4 – BORROWINGSI. BORROWINGS IN INDIA Reserve Bank of India – – Other banks 8,687,580 4,715,492 Other institutions and agencies – – II. BORROWINGS OUTSIDE INDIA [Refer Notes: Sch 18 IV. 1. b)] 1,250,000 – 9,937,580 4,715,492 Secured borrowings included in I and II above Nil Nil

SCHEDULE 5 – OTHER LIABILITIES AND PROVISIONSI. Bills payable – –II. Inter-office adjustments (net) – – III. Interest accrued 181,043 170,881 IV. Others (including provisions) 8,157,073 6,164,353 8,338,116 6,335,234

SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIAI. Cash in hand (including foreign currency notes) – – II. Balances with Reserve Bank of India i) In current account 660,697 490,697 ii) In other accounts – – 660,697 490,697

SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE I. In India Balances with banks i) In Current Accounts 882,127 269,328 ii) In Other Deposit Accounts – – Money at call and short notice i) With banks – – ii) With other institutions – – 882,127 269,328 II. Outside India i) In Current Accounts – – ii) In Other Deposit Accounts – – iii) Money at call and short notice – – – – 882,127 269,328







SCHEDULE 10 – FIXED ASSETS I. PREMISES At cost as on 31 March of the preceding year – – Additions during the year – – Deductions during the year – – – – Depreciation to date – – Total Net Book Value I – –

II. OTHER FIXED ASSETS (Including Furniture & Fixtures) At cost as on March 31 of the preceding year 1,577,531 1,395,501 Additions during the year 222,402 233,387 Deductions during the year (77,338) (51,357) 1,722,594 1,577,531 Depreciation to date (1,268,467) (1,145,584) Total Net Book Value II 454,127 431,947 Net Book Value I and II 454,127 431,947

SCHEDULE 11 - OTHER ASSETS I. Inter-office adjustments (net) – – II. Interest accrued 35,560 25,955 III. Tax paid in advance/ tax deducted at source 5,045 4,828 IV. Stationery and Stamps – – V. Non-banking assets acquired in satisfaction of claims – – VI. Deferred tax asset – 317,770 VII. Others (Including Debit Balance in Profit and Loss Account 4,160,283 2,849,037 Rs.2,963,616 (‘000) - Previous year Rs.2,048,806 (‘000)) 4,200,888 3,197,590

SCHEDULE 12 - CONTINGENT LIABILITIES I. Claims against the bank not acknowledged as debts 46,425 43,408 II. Liability for partly paid investments – – III. Liability on account of outstanding forward exchange contracts – –IV. Guarantees given on behalf of constituents a) In India – – b) Outside India – –V. Acceptances, endorsements and other obligations – – VI. Other items for which the bank is contingently liable – –

46,425 43,408


SCHEDULE 8 – INVESTMENTS I. Investment in India in i) Government Securities (Treasury Bill) 5,332,740 3,909,014 ii) Other approved securities – – iii) Shares – – iv) Debentures and Bonds – – v) Subsidiaries and/or joint ventures – – vi) Others – – 5,332,740 3,909,014 II. Investment outside India in i) Government Securities (including local authorities) – – ii) Subsidiaries and/or joint ventures abroad – – iii) Others – – – – 5,332,740 3,909,014 SCHEDULE 9 – ADVANCES A. i) Bills purchased and discounted – – ii) Cash credits, overdraft and loan repayable on demand # 21,228,739 17,101,455 iii) Term loans - Staff 1,209 1,737 21,229,948 17,103,192 B. i) Secured by tangible assets 1,171 1,658 ii) Covered by bank/ governments guarantees – – iii) Unsecured 21,228,777 17,101,534 21,229,948 17,103,192 C. I. Advances in India i) Priority sector * – – ii) Public sector – – iii) Banks – – iv) Others 21,229,948 17,103,192 21,229,948 17,103,192 II. Advances Outside India i) Due from banks – – ii) Due from others (a) Bills purchased and discounted – – (b) Syndicated loans – – (c) Others – – 21,229,948 17,103,192 * Not applicable to the Bank vide RBI letter no. RPCD.CO.Plan.11642/04.09.09/2008-09 dated 11/05/2009 # Card Member Credit Balances amounting to Rs. 413,468 (‘000) re-classed to Other Liabilities commencing year 2013-14





Year ended Year ended March 31, March 31, 2014 2013

SCHEDULE 13 – INTEREST EARNED Interest/discount on advances/bills 723,457 599,106 Income on investments 330,770 286,790 Interest on balances with the Reserve Bank of India and other inter-bank funds – – Others – – 1,054,227 885,896 SCHEDULE 14 – OTHER INCOME Commission, exchange and brokerage (net) 5,978,560 5,122,164 Net Profit/(Loss) on sale of investments – – Net Profit /(Loss) on revaluation of investments – – Profit on sale of land, building and other assets 7,145 6,573 Less: Loss on sale of land, building and other assets (2,803) (2,496)Net profit on exchange transactions – – Income earned by way of dividends etc. from subsidiaries, companies and/ or joint ventures abroad/in India – – Miscellaneous Income 553,953 546,911 6,536,855 5,673,152

SCHEDULE 15 – INTEREST EXPENDEDInterest on deposits 545,886 519,023 Interest on Reserve Bank of India/ interbank borrowings 714,792 654,299 Others – – 1,260,678 1,173, 322


SCHEDULE – 18 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS

I. The financial statements for the year ended March 31, 2014 comprises the Balance Sheet, Profit & Loss Account, Cash Flow Statement and Schedules of the India Branch of American Express Banking Corp. (the “Bank”), which is incorporated in the New York State Banking Law, United States of America. The Bank’s ultimate holding company is American Express Company, which is incorporated in the United States of America.

II. Background: American Express Banking Corp. has been granted licence by Reserve Bank of India (‘RBI’) to carry on banking business in India. The licence authorises the Bank to conduct credit card business (including prepaid cards), distribute traveller cheques and accept institutional deposits. In line with the market practice and the RBI Guidelines, the bank issues credit cards, prepaid cards and provides payment solutions to corporates and other entities for their purchases like inventory, fixed assets, payroll cost and other expenses like office supplies, utilities, advertising, couriers, etc. During the year, the nature of these corporate payment solutions have been apprised to the RBI vide letter dated June 6, 2013.

III. Significant Accounting Policies

1. Basis of preparation: The financial statements are prepared under the historical cost convention on the accrual basis of accounting,

Year ended Year ended March 31, March 31, 2014 2013

SCHEDULE 16 – OPERATING EXPENSESPayments to and provisions for employees 1,238,807 1,081,438 Rent, taxes and lighting 181,536 159,493 Printing and stationery 82,028 44,342 Advertisement and publicity 1,729,266 1,404,977 Depreciation on Bank’s property 167,576 160,704 Director’s fee, allowances and expenses – – Auditors’ fees and expenses 3,400 3,300 Law charges 22,488 6,642 Postage, telegram, telephones etc. 144,768 131,734 Repairs and maintenance 153,393 111,766 Insurance 8,761 7,779 Business Support Cost 1,856,690 1,916,420 Other expenditure 800,396 670,948 6,389,109 5,699,543

SCHEDULE 17 – PROVISIONS AND CONTINGENCIESDepreciation in the value of securities – – Provision for doubtful advances and receivables 537,599 566,122 Provision for income tax and wealth tax : Wealth Tax 736 400 Fringe Benefit Tax – – Deferred Income Tax [Refer Notes: Sch18 IV. 2.] 317,770 (152,913) 856,105 413,609




except where otherwise stated and comply with Generally Accepted Accounting Principles (GAAP) in India, statutory requirements prescribed under The Banking Regulation Act, 1949, circulars and guidelines issued by the Reserve Bank of India (‘RBI’) from time to time, the Accounting Standards (AS) notified by the Companies (Accounting Standard) Rules, 2006 to the extent applicable and current practices prevailing within the banking industry in India.

Pursuant to the circular 15/2013 dated September 15, 2013 read with circular 08/2014 dated April 4, 2014, till the Standards of Accounting or any addendum thereto are prescribed by the Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply.

2. Use of Estimates: The preparation of financial statements, in conformity with the generally accepted accounting principles, requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and reported income and expenses for the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates and these differences are recognized prospectively in the current and future periods.

3. Revenue Recognition (i) Fees and commissions received, net of rebates/commissions paid, are recognized upon the occurrence of the transactions.

Annual fees on cards are amortized over the period of one year. (ii) Interest income is recognised as it accrues, except in the case of non-performing assets, where it is recognised on realisation,

as per the prudential norms prescribed by RBI. (iii) Income from cheque bounce charges and delayed charges are recognised when the ultimate collection is no longer uncertain. (iv) Interest income on discounted instruments is recognised over the tenure of the instruments.

4. Foreign Currency transactions and balances Transactions denominated in foreign currencies are recorded on the date of transactions at the standard exchange rate determined

by the Bank. Exchange differences arising on the foreign currency transactions settled during the year are recognised in the Profit and Loss Account of the year.

Monetary Assets and Liabilities denominated in foreign currencies as at the Balance Sheet date are restated at the closing rates notified by Foreign Exchange Dealers’ Association of India (FEDAI) and the resultant exchange differences are recognised in the Profit and Loss Account.

5. Investments (i) Classification In accordance with Reserve Bank of India (‘RBI’) guidelines, all investments are categorised as ’Held to Maturity’, or ’Held

for Trading’ or ‘Available for Sale’. Investments that the Bank intends to hold to maturity are classified as ‘Held to Maturity’. Investments that are held principally

for resale within ninety days from the date of purchase are classified as ‘Held for Trading’. All other investments are classified as ‘Available for Sale’. An Investment is classified as ‘Held to Maturity’, ‘Available for Sale’ or ‘Held for Trading’ at the time of its purchase.

(ii) Valuation Treasury Bills, being discounted instruments are valued at carrying cost. (iii) Brokerage, commission, etc., paid at the time of acquisition of securities are charged to Profit and Loss account.

6. Advances Loans and Advances comprises card outstanding and loans to staff. Loans and Advances are stated net of specific provision made

towards Non-Performing Assets (NPAs) and unrealised income from non performing assets. Advances under card receivables are maintained at the card member level.

Provision for NPAs on card balances outstanding is made at card member level in compliance with the prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances issued by the Reserve Bank of India and are monitored and tracked at a portfolio level.

Provision for Standard Assets is made in compliance with the prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances issued by the Reserve Bank of India and disclosed under Other Liabilities and Provisions.

The Bank identifies all card accounts with delinquencies and writes off in the books of account, the outstanding card receivables which are 180 days past due from the due date. In addition, accelerated write off is effected where it is evident that the outstanding is unlikely to be recovered.

Receivables from overseas group entities on account of card payments made in India have been classified under Other Assets in the Financial Statements.

SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014

Schedule 18 – Significant Accounting Policies and Notes to Financial Statements (Contd.)




7. Fixed assets and depreciation

(i) Fixed assets are stated at cost less accumulated depreciation. The Bank capitalizes all costs relating to acquisition and installation of fixed assets. However, fixed assets costing less than Rs.5,000/- are expensed out. All assets costing upto Rs.10,000 are fully depreciated in the year of purchase.

(ii) Carrying amounts of cash generating assets are reviewed at each Balance Sheet date to determine whether there is any impairment. Impairment loss, if any, is recognised in the Profit and Loss Account whenever the carrying amount exceeds the recoverable amount.

(iii) Depreciation on fixed assets is provided on pro-rata basis over the period of the estimated useful life of the asset on Straight Line Method, subject to the minimum rate of depreciation prescribed in Schedule XIV to the Companies Act, 1956.

(iv) The fixed assets are depreciated as per the rates given in the table below: Asset Depreciation rate

Leasehold Improvements Over the lease period Data Processing Equipments 33.33% Transport Equipments 33.33% Furniture and Fixtures 12.50% Machinery and Equipments (Other than headsets and mobile phones) 12.50% Headsets and Mobile Phones 33.33%

8. Accounting for LeasesLeases in which a significant portion of the risks and rewards of ownership are retained by the lessors are classified as operating lease. Lease payments for assets taken on operating leases are recognized as an expense in the Profit and Loss Account over the lease term on a straight line basis.

9. Employee Benefits a) Provident fund The Bank contributes to mandatory government administered provident funds which are defined contribution schemes as the

Bank does not carry any further obligation, apart from the contributions made on a monthly basis. The contributions are accounted for on an accrual basis and recognized in the Profit and Loss Account.

b) Pension (i) The Bank has a pension scheme, which is a defined contribution plan. Employees of the Bank are entitled to receive

retirement benefits under the Bank’s Superannuation scheme either under a cash-out option through salary or under a defined contribution plan to the pension fund. Contributions under these schemes are recognised in the Profit and Loss Account in the period in which they accrue.

In addition to the above arrangement, there are deferred (exited) employees, who had opted for the defined benefit scheme. (ii) The Bank has set up a Pension Trust viz. American Express Banking Corp. India Staff Superannuation Fund to manage

the contributions to the pension fund. The Bank provides for its pension liability based on actuarial valuation of the pension liability, based on Projected Unit Credit Method, as at the Balance Sheet date carried out by an independent actuary and contributes to the pension fund. The contributions made to the Trust are recognised as plan assets. The defined benefit obligation as reduced by fair value of plan assets is recognised in the Balance Sheet. Actuarial gains and losses are recognised in the Profit and Loss Account in the year in which they arise.

c) Gratuity The Bank has set up a Gratuity Trust viz. American Express Banking Corp. India Employees Gratuity Fund to manage the

contributions to the gratuity fund. The Bank provides for its gratuity liability based on actuarial valuation of the gratuity liability as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary and contributes to the gratuity fund. The contributions made to the Trust are recognised as plan assets. The defined benefit obligation as reduced by fair value of plan assets is recognised in the Balance Sheet. Actuarial gains and losses are recognised in the Profit and Loss Account in the year in which they arise.

d) Leave encashment The Bank provides for leave encashment liability, which is payable on separation or termination of service. The liability for

leave encashment, which is a defined benefit scheme, is provided based on actuarial valuation as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary.

10. Income Taxes Current tax is determined as the amount of tax payable in respect of taxable income for the year.






Deferred tax is recognized, subject to the consideration of prudence in respect of deferred tax asset, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

In case there are carry forward tax losses, the Deferred Tax Asset is recognized on all items of deferred tax asset only when there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

11. Membership Reward Points The Membership Reward programme is a card-based rewards programme through which eligible card members can earn points for

purchases charged on the Bank’s card products. Membership Rewards points can be redeemed for a broad variety of rewards. The Bank establishes balance sheet provisions, that represent the estimated cost of points earned to date that are ultimately expected to be redeemed, based on the management’s judgement and shown as a part of Other Liabilities and Provisions. The cost of Membership Reward Points is included as part of Advertisement and Publicity Expense.

12. Accounting for Provision, Contingent Liabilities and Contingent Assets The Bank creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of

resources and a reliable estimate of the amount of the obligation can be made.

A disclosure for Contingent Liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

The provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. Contingent assets are not recognized in the financial statements.

13. Segment Reporting The Bank has recognised Banking Operations and Treasury operations, as the primary reporting Business Segments, in accordance

with the RBI guidelines on compliance with Accounting Standard – 17 issued by Institute of Chartered Accountants of India.

Treasury activities include the Investments and balance in bank account to meet the Statutory Liquidity Ratio (SLR) requirement and maintenance of Cash Balances to meet the Cash Reserve Ratio (CRR) requirement and the corresponding funding to meet these requirements. The interest income and interest expenses related to these activities comprise the revenue and expense of this segment.

Banking Operations include card operations, travellers’ cheque distribution and institutional deposits. Interest income and expense (other than those identified with the Treasury Operations), other identified income and operating expenses are reckoned in the operating results of this segment.

14. Cash And Cash Equivalents Cash and cash equivalents includes cash in hand, demand deposits with banks and other fixed deposits with bank with original

maturities of three months or less.

15. Impairment of Assets The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/

external factors in accordance with Accounting Standard – 28, Impairment of Assets. The carrying amount is reduced to the recoverable amount and reduction is recognised as an impairment loss in the Profit and Loss Account.

IV. NOTES TO FINANCIAL STATEMENTS

1. Statutory Disclosures as per RBI norms:

a) Capital Adequacy Ratio In terms of the extant RBI guidelines on Basel III Capital Regulations, as of March 31, 2014, the Bank is required to maintain

a minimum Capital to Risk-weighted Asset Ratio (CRAR) of 9 percent. Further, within this overall capital requirement, the Bank is also required to maintain a Minimum Common Equity Tier 1 of 5% and Minimum Tier 1 Capital of 6.5%. The Bank’s Capital Adequacy Ratio, calculated as per the Basel III Capital Regulations is provided here under. However, as these regulations have become applicable only with effect from the current Financial Year, the corresponding data for the previous year is not being provided.






Particulars 2013-14

Common Equity Tier 1 capital ratio (%) 12.67% Tier I Capital Ratio (%) 12.67% Tier II Capital Ratio (%) 3.89% Total Capital ratio (CRAR) (%) 16.56% Percentage of the shareholding of the Government of India in public sector banks – Amount of equity capital raised Amount of additional Tier 1 capital raised – Amount of additional Tier 2 capital raised of which - – Debt Capital instrument: (Amount in Rs. ’000) 1,250,000 – Preference Share Capital Instruments –

The Bank’s Capital Adequacy Ratios as per the Basel II guidelines for the previous year are as under

Particulars 2012-13 CRAR - Tier I Capital 17.61% CRAR - Tier II Capital 0.56% CRAR - Total Capital 18.17% Amount of subordinated debt raised as Tier II Capital – Amount raised by issue of IPDI – Amount raised by issue of Upper Tier II Instruments –

b) Subordinated Debt: Schedule 4 – Borrowings includes an amount of Rs. 1,250,000 thousands (Previous Year – NIL) pertaining to subordinated

debt raised from Head Office. Details of the Head Office borrowings is as under – (Amount Rs. in ‘000) Particulars 2013-14 2012-13

Date of Borrowing 1-Nov-2013 – Rate of Interest Interest Free – Amount (in Rs. ’000) 1,250,000 – Date of Repayment 1-Nov-2023 – Call Option with the Bank After completion of 5 years from the Issuance date (1-November-2018),

with a prior notice of 120 days to the Lender. The Bank has decided to exercise the option only after 30-June-2020. –

c) Business/Information Ratios: Particulars 2013-14 2012-13 a. Interest income as a percentage to working funds (%) 3.99 3.94 b. Non-interest income as a percentage to working funds (%) 24.71 24.77 c. Operating profit as a percentage to working funds (%) (0.24) (1.41) d. Return on assets (%) (3.46) (3.23) e. Business (deposits plus advances) per employee(Amount in Rs. ’000) 33,282 33,030 f. Profit per employee (Amount in Rs. ’000) (1,212) (1,123)

Definitions: a) Working funds is the average of total assets during the year as per the returns submitted to RBI. b) Operating profit = (Interest income + other income – interest expenses – operating expenses – amortization of premia on

investments – profit / (loss) on sale of fixed assets). c) “Business” is the total of advances and deposits (net of inter bank deposits). d) Productivity ratios are based on number of employees at year end.






d) Asset Liability Management - Maturity Pattern Classification of assets and liabilities under the different maturity buckets are based on the estimates and assumptions used

by the Bank. These estimates and assumptions are based on the guidelines on Asset Liability Management issued by Reserve Bank of India.

(Amount in Rs. ‘000)

Over 3 Over 6 Over 1 Over 3 Particulars Day 1 2 to 7 8 to 14 15 to 28 29 days to months months year years Over 5 Total days days days 3 months and upto and upto and upto and upto years 6 months 12 months 3 years 5 years Deposits - Current Year – 200,000 – 728,500 1,619,160 2,646,322 1,684,595 2,000 – – 6,880,577 Previous Year – 250,000 152,249 327,000 1,718,065 2,410,573 1,888,901 – – – 6,746,788 Advances - Current Year 595,393 3,572,349 4,167,741 8,335,482 2,626,951 637,041 563,330 619,976 110,476 1,209 21,229,948 Previous Year 473,805 2,842,831 3,316,636 6,633,272 2,404,524 181,967 497,077 432,044 319,301 1,735 17,103,192 Investments - Current Year 244,458 701,848 593,145 796,823 948,041 1,222,401 281,516 222,843 288,842 32,823 5,332,740 Previous Year 79,972 662,171 389,383 652,460 577,248 915,741 336,647 187,508 4,698 103,186 3,909,014 Borrowings - Current Year 4,900 150,000 200,000 3,300,000 1,650,001 3,382,680 – – – 1,250,000 9,937,580 Previous Year 323,824 380,000 270,000 470,000 3,271,668 – – – – – 4,715,492 Foreign Currency Assets - Current Year 639,285 – 45,349 260,344 153,747 – – – – – 1,098,725 Previous Year 128,385 68,500 17,637 106,994 73,655 – – – – – 395,171 Foreign Currency Liabilities - Current Year – 134,382 – 548,876 590,774 – – 592 – 1,250,000 2,524,624 Previous Year – – 11,651 450,226 – 144,574 – 1,087 – – 607,538 Maturity Pattern of Assets and Liabilities has been compiled by the Management and relied upon by the auditors.

e) Provisions and Contingencies : Break-up of Provisions and Contingencies shown under Schedule 17. (Amount in Rs. ‘000)

Particulars 2013-2014 2012-2013 Provision for depreciation on Investment – – Provision towards Non Performing Assets* (42,138) 68,252 Provision towards Standard Assets 17,342 8,874 Write-offs 728,094 586,981 Recoveries (179,005) (117,838) Others 13,306 19,853 Provision made towards Income tax and Wealth Tax and Deferred Tax 318,506 (152,513) TOTAL 856,105 413,609

* Please refer note on NPA methodology under Note IV 1 (g) below.

f) Investments (Amount in Rs. ‘000) Value of Investments 2013-2014 2012-2013 Gross value of Investments In India 5,332,740 3,909,014 Outside India – – Provision for depreciation In India – – Outside India – – Net value of investment In India 5,332,740 3,909,014 Outside India – –






g) Asset Quality - Non-performing assets (‘NPAs’) Non-Performing Assets (NPAs) (Amount in Rs. ‘000)

Particulars 2013-2014 2012-2013

(i) Net NPAs to Net Advances (%) 0.52% 1.87% (ii) Movement of NPAs (Gross) (a) Opening balance 446,115 234,247 (b) Additions during the year 1,719,674 681,011 (c) Reductions during the year 1,970,636 469,143 (d) Closing balance 195,153 446,115 (iii) Movement of provisions for NPAs (excluding provisions on standard assets) (a) Opening balance 126,814 58,562 (b) Additions during the year 465,806 68,252 (c) Reductions during the year 507,945 - (d) Closing balance 84,675 126,814 (iv) Movement of Net NPAs (a) Opening balance 319,301 175,685 (b) Additions during the year 1,253,868 143,616 (c) Reductions during the year 1,462,691 (d) Closing balance 110,478 319,301

During the year 2013-2014, the Bank has prospectively developed a process to identify movement of NPAs. Accordingly, the Additions, Up-gradations, Recoveries and Write-offs is computed at each month-end; being the difference between the opening and closing balance of NPAs.

For 2012-2013 : Write-offs is net of recoveries. Additions to NPAs is the balancing figure, being the difference between closing balance and opening balance and write-offs.

h) Category-wise NPAs (funded) (Amount in Rs. ‘000)

Non-performing asset category 2013-14 2012-13 Gross NPAs Provisions Gross NPAs Provisions Sub standard 147,303 36,825 425,735 106,434 Doubtful – – – – Loss 47,850 47,850 20,380 20,380 Total 195,153 84,675 446,115 126,814

i) Single Borrower Limit (SBL) and Group Borrower Limits (GBL) : During the year, the Bank’s credit exposure to single borrowers and group borrowers were within the limits prescribed by

Reserve Bank of India.

j) Disclosure of complaints:

Customer complaints

Particulars 2013-14 2012-13 1 No. of complaints pending at the beginning of the year 342 56 2 No. of complaints received during the year 10,923 6,542 3 No. of complaints redressed during the year 10,930 6,256 4 No. of complaints pending at the end of the year 335 342






k) Concentration of Deposits, Advances, Exposures and NPAs :

Concentration of Deposits (Amount in Rs. ‘000)

Particulars 2013-14 2012-13

1 Total Deposits of twenty largest depositors 6,842,414 6,746,788 2 Percentage of Deposits of twenty largest depositors to Total Deposits of the Bank 99.45% 100.00%

Concentration of Advances (Amount in Rs. ‘000)


1 Total Advances of twenty largest borrowers 4,560,435 3,419,570 2 Percentage of Advances of twenty largest borrowers to Total Advances of the Bank 21.40% 19.85%

Concentration of Exposures (Amount in Rs. ‘000)


1 Total Exposure to twenty largest borrowers / customers 4,560,435 3,419,570 2 Percentage of Exposures to twenty largest borrowers/ customers to Total Exposure of the bank on borrowers/ customers 21.40% 19.85%

Concentration of NPAs (Amount in Rs. ‘000)


1 Total Exposure to top four NPA accounts 71,237 112,068

l) Sector-wise NPAs Percentage of NPAs to Total Advances S. Sector in that sector No. 2013-14 2012-13

1 Agriculture and allied activities – – 2 Industry (Micro & small, Medium and Large) – – 3 Services – – 4 Personal Loans 0.92% 2.59%

m) Movement of NPAs (Amount in Rs. ‘000)

S. No Particulars 2013-14 2012-13* 1 Gross NPAs – Opening Balance 446,115 234,247 2 Additions – Fresh NPAs during the year 1,719,674 681,011 3 Sub-Total [ A ] ( 1 + 2 ) 2,165,789 915,258 4 Less: i. Upgradations 1,130,339 – ii. Recoveries 312,721 iii. Write-offs 527,576 469,143 Sub-Total [ B ] 1,970,636 469,143 5 Gross NPAs – Closing Balance 195,153 446,115

During the year 2013-2014, the Bank has prospectively developed a process to identify movement of NPAs. Accordingly, the Additions, Up-gradations, Recoveries and Write-offs is computed at each month-end; being the difference between the opening and closing balance of NPAs.

* For 2012-2013: Write-offs is net of recoveries. Additions to NPAs is the balancing figure, being the difference between closing balance and opening balance and write-offs.






n) Provisioning Coverage Ratio (PCR) In terms of the RBI guidelines, the Bank’s Provisioning Coverage Ratio as of September 30, 2010 was 82.88%. The provisioning

coverage ratio of the Bank with regard to the NPAs as on March 31, 2014 computed as per the RBI guidelines was 88.74%. (March 31, 2013 – 48.26%).

o) The Bank has no disclosure to make in respect of the following items as the relevant items are either Nil or Not Applicable. (i) Investments : Repo Transactions. Non-SLR Investment Portfolio. Non-performing Non-SLR Investments. Movement of provisions held towards depreciation in Investments. Sale and transfers to / from HTM category. Investments in Associates (ii) Derivatives : Forward Rate Agreements / Interest Rate Swaps. Exchange Traded Interest Rate Derivatives. Disclosure on risk exposure in derivatives. Credit Default Swaps. (iii) Asset Quality : Particulars of Accounts Restructured. Details of financial assets sold to Securitisation / Reconstruction Company for Asset Reconstruction. Details of non-performing financial assets purchased / sold. Unsecured Advances: Assets for which intangible securities have been taken as collateral Provision for restructured Loans / Assets (iv) Exposures : Exposure to Real Estate Sector. Exposure to Capital Market. Risk Category wise Country Exposure. Receivables and payables from overseas group entities are not treated as exposures for the purpose of country risk exposure.

(v) Awards passed by the Banking Ombudsman.

(vi) Letter of Comforts issued by the Bank.

(vii) Overseas Assets, NPAs and Revenue.

(viii) Off-Balance Sheet SPVs sponsored.

(ix) Disclosure relating to securitisation.

(x) Draw down from Reserves. (xi) Penalties imposed by Reserve Bank of India.

(xii) Exposure to NBFCs.

(xiii) Discontinuing Operations.

(xiv) Unamortised Pension and Gratuity Liabilities.

(xv) Consolidated Financial Statements.

(xvi) Earnings per share

2. Deferred Taxes As of March 31, 2013 the Bank had a net Deferred Tax Assets (DTA) of Rs.317,770 thousand which was included under Other Assets.

DTA for timing differences was recognised subject to the consideration of prudence and carried forward only to the extent that there was a reasonable certainty that sufficient future taxable income will be available against which such DTA can be realised. Further, DTA on carried forward unabsorbed tax losses were not recognised. The major components giving rise to the deferred tax assets and liabilities in the Table below.






As of March 31, 2014, in view of the losses in the current year and the immediate past periods, the Bank has reviewed the above position. Though profits were projected to accrue from the Financial Year 2015-2016 as per the Business Plans, in terms of the guidelines provided under Accounting Standard 22 for recognition of DTA, it is not tenable to state with virtual certainty supported by convincing evidence that sufficient taxable income would accrue in the immediate future. Hence, as a matter of prudence, the Bank has decided not to recognise DTA as on March 31, 2014.



Deferred Tax Assets – On depreciation on fixed assets – 75,779 – On provision for doubtful advances – 162,005 – On provision for other contingencies – 26,126 – On provision for employee benefits – 53,860

Deferred Tax Liabilities – –

Net Deferred Tax Assets – 317,770

3. Segment Reporting The summary of the segmental information of the Bank for the Year ended 31st March, 2014 are given below – (Amount in Rs. ‘000)

Segmentation

Banking Operations Treasury Total

2013-14 2012-13 2013-14 2012-13 2013-14 2012-13

Segment revenue 7,260,312 6,272,258 330,770 286,790 7,591,082 6,559,048

Segment result (455,841) (879,939) (140,463) – (596,304) (879,939) Operating Profits/(Loss) – – – – (596,304) (879,939)

Income taxes – – – – 318,506 (152,513)

Extraordinary profit / (loss) – – – –

Net profit (loss) (914,810) (727,426) Other information :

Segment assets 26,661,098 20,650,556 6,094,384 4,428,614 32,755,482 25,079,170

Unallocated assets

(Taxes) – – – – 5,045 322,598

Total assets 26,661,098 20,650,556 6,094,384 4,428,614 32,760,527 25,401,768 Segment liabilities 26,666,143 20,973,154 6,094,384 4,428,614 32,760,527 25,401,768

Unallocated liabilities

(Taxes) – – – – – –

Total liability 26,666,143 20,973,154 6,094,384 4,428,614 32,760,527 25,401,768 Cost to acquire fixed assets 222,402 233,387 – – 222,402 233,387 Depreciation 167,576 160,704 – – 167,576 160,704

The Bank does not have any overseas operations and hence there is no geographical segment reporting.

4. Related Party Disclosures In the terms of the Accounting Standard 18 on ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India

and the related guideline issued by the RBI, the details pertaining to related parties are as under:






Related party relationship: Sr. No. Relationship Party Name 1. Parent - Head Office American Express Banking Corp., New York. 2. Ultimate Holding Company American Express Company. 3. Subsidiaries of Ultimate Holding Company American Express (India) Pvt Ltd. American Express Services India Limited. American Express Foreign Exchange Services India Limited. American Express International Inc. Amex Bank Of Canada American Express Australia Ltd American Express Prepaid Card Management Corporation American Express Travel Related Services Company Inc. American Express Limited American Express Advanced Services Europe Limited American Express (Thai) Co., Ltd. American Express Europe Limited American Express (Malaysia) Sdn. Bhd. Loyalty Solutions and Research Pvt Ltd 4. Subsidiaries/ Associates/ Joint Ventures – 5. Key Management Personnel ** Manoj Adlakha as Interim Chief Executive Officer (w.e.f. 13 May 2014). Shailesh Baidwan as Chief Executive Officer (Upto 06 May 2014).

The related party balances and transactions for the year ended March 31, 2014 are summarized as follows: (Amount in Rs. ‘000) Particulars Related Party Parent – Head Office Subsidiaries of Head Office / Parent Co.

2013-14 2012-13 2013-14 2012-13 Borrowings American Express Banking Corp, New York 1,250,000 – – – Borrowings Total 1,250,000 – – – Maximum Outstanding American Express Banking Corp, New York 1,250,000 – – – Deposits American Express India Pvt Ltd. – – 6,660,000 6,650,000 Others – – 27,000 27,000 Deposits Total – – 6,687,000 6,677,000 Maximum Outstanding American Express India Pvt Ltd. – – 7,530,000 7,100,000 Others – – 27,906 27,000 Advances American Express India Pvt Ltd. – – 248,687 172,924 American Express Services India Ltd – – 7,397 35,768 Others – – 1,134 1,407 Advances Total – – 257,218 210,099 Maximum Outstanding American Express India Pvt Ltd. – – 291,886 216,671 American Express Services India Ltd – – 16,397 35,768 Others – – 2,728 3,263 Receivables American Express Travel Related Services Company Inc. – – 150,007 132,839 American Express International Inc. – – 92,246 94,458 American Express Australia Ltd – – 1,080 28,474 Others – – 43,212 20,323 Receivables Total – – 286,545 276,094 Payables American Express India Pvt Ltd. – – 376,854 373,002 American Express International Inc. – – 295,787 208,988 American Express Europe Limited – – 204,582 41,258






Particulars Related Party Parent – Head Office Subsidiaries of Head Office / Parent Co.

2013-14 2012-13 2013-14 2012-13 American Express Travel Related Services Company Inc. – – 134,647 251,440 Others – – 116,713 99,625 Payables Total – – 1,128,583 974,313 Transfer of assets American Express India Pvt Ltd. – – 11,914 (1,360) Others – – (1,521) – Transfer of assets Total – – 10,393 (1,360) Interest Expense American Express India Pvt Ltd. – – 532,976 508,537 Others – – 2,050 399 Interest Expense Total – – 535,026 508,936 Revenue from Services American Express Travel Related Services Rendered Company Inc. – – 884,642 780,596 American Express Limited – – 330,733 91,938 American Express Prepaid Card Management Corporation – – 64,678 127,148 Others – – 218,816 156,578 Revenue from Services – – 1,498,869 1,156,260 Rendered Total Cost of Services American Express Services India Ltd – – 670,349 520,713 Received American Express Travel Related Services Company Inc. – – 617,934 709,819 American Express India Pvt Ltd. – – 611,046 484,666 American Express Australia Ltd – – 89,056 262,524 Others – – 16,061 13,386 Cost of Services Received Total – – 2,004,446 1,991,108

** No disclosure has been made in respect of Key Management Personnel, keeping in view the secrecy clauses and the provisions of the RBI guidelines. 5. Other Liabilities include: (Amount in Rs. ‘000) Particulars 2013-2014 2012-2013 Provisions towards Standard Assets 84,478 67,136 Other Provisions* 98,992 100,148 Prepaid Cards 816,509 240,145

*Includes Counter Cyclical Provisioning Buffer of Rs.88,500 thousands (Previous Year Rs.88,500 thousands).

6. Floating Provisions: The Bank has no policy of making floating provision.

7. Leases The Bank’s significant leasing arrangements are in respect of operating leases for commercial and residential premises. Lease

expenditure for operating leases is recognized on a straight-line basis over the primary period of lease. (Amount in Rs. ‘000)


Future minimum lease payments under non-cancellable Operating leases Not later than 1 year 114,476 94,224 Later than 1 year and not later than 5 years 158,797 2,69,681 Later than 5 years – – Lease payments recognized in the Profit and Loss Account in respect of operating leases 103,106 1,08,571






8. Provision, Contingent Liabilities and Contingent Assets Movement in provision for membership reward points: (Amount in Rs. ‘000)


Opening 864,006 614,495

Additions 889,745 711,462

Utilisations/Write backs 755,716 461,951

Closing Balance 998,035 864,006

The bank estimates provision for card reward points by applying historic redemption on points eligible for redemption by a card member.

9. Taxes The income tax expenses comprise the following: (Amount in Rs. ‘000)


Wealth Tax 736 400

Deferred Income tax (benefit) / expense 317,770 (152,913)

Total 318,506 (152,513) 10. Description of contingent liabilities

Contingent Liabilities Brief Description

1. Claims against the bank not The Bank is a party to various legal proceedings in the normal course of acknowledged as debts business. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank’s financial condition, result of operations and cash flows.

* Also refer Schedule 12 – Contingent Liabilities

11. Employee Benefits

The disclosures required as per the revised AS 15 are as under:

Brief description of the Plans

The Bank has various schemes for long-term benefits such as provident fund, pension, and gratuity and leave encashment. The Bank’s defined contribution plans are provident fund and employees’ pension scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952), and the Bank has no further obligation beyond making the contributions. The Bank’s defined benefit plans includes pension for deferred/vested pensioner (left employees), gratuity and leave encashment.


A Charge to the Profit and Loss Account based on contributions: 2013-14 2012-13

Provident fund 31,671 25,992

Superannuation 2,623 2,781

TOTAL 34,294 28,773






B Contribution towards Pension for deferred / vested pensioners (left employees) : The above employee benefit is covered under Pension Trust and as detailed under Paragraph III 9 (b) of Schedule 18 above. Pension: The components of net benefit expenses recognized in the Profit and Loss Account and Balance Sheet and the funded status for the pension benefit plan are summarised below:


As at 31st March, 2014 As at 31st March, 2013

I Assumptions Mortality Rate (in deferment) Indian Assured Lives Indian Assured Lives Mortality (2006-08) Mortality (2006-08) (modified) Ult. (modified) Ult. Mortality Rate (Post retirement) LIC (1996-98) Ultimate LIC (1996-98) Ultimate Discount Rate 9.25% 8.00% Rate of increase in compensation Not Applicable Not Applicable Rate of return (expected) on plan assets 7.50% 7.50%

II Changes in present value of obligations Defined Benefit Obligation at beginning of the Year 29,667 26,804 Interest Cost 2,173 2,265 Current Service Cost – – Actuarial Losses/(Gains) (2,799) 1,533 Benefit Payments (5,018) (935) Defined Benefit Obligation at end of the Year 24,023 29,667

III Changes in fair value of plan assets Fair Value of Plan Assets at beginning of the Year 72,164 78,558 Expected return on plan assets 5,224 5,857 Actuarial Gain / (Loss) (1,601) (11,316) Benefit Payments (5,018) (935) Fair Value of Plan Assets at end of the Year 70,769 72,164 IV Amounts to be recognised in the Balance Sheet Defined Benefit Obligation at the end of the Year 24,023 29,667 Fair Value of Plan Assets at the end of the Year 70,769 72,164 Amount not recognised as an Asset – – Surplus Assets 46,746 42,497

V Expense Recognised – – The Pension Fund assets are invested in government securities, corporate bonds and other eligible investments.

As at 31st March, 2014 As at 31st March, 2013 Percentage

Government of India securities (Central and State) 42.47 44.82

High quality corporate Bonds (Including Public Sector Bonds) – –

Equity shares – –

Cash (Including Special Deposits) 57.53 55.18

Others – –

Total 100.00 100.00






Experience Adjustments

As at 31st As at 31st As at 31st As at 31st As at 31st March, 2014 March, 2013 March, 2012 March, 2011 March, 2010

Defined Benefit Obligation at end of the period (24,023) (29,667) (26,804) (28,145) (30,509) Plan Asset as at the end of the period 70,769 72,164 78,558 70,909 68,890 Funded Status 46,746 42,497 51,754 42,765 38,381 Experience Gain/(Loss) adjustments on plan liabilities (1,667) 865 (372) 3,117 Not Available Experience Gain/(Loss) adjustments on plan assets (1,601) (11,316) 3,842 (3,147) Not Available Actuarial Gain/(Loss) due to change on assumptions 4,466 (2,398) 2,449 1,580 Not Available

(Amount in Rs. ‘000) C Contribution towards Gratuity: The above employee benefit is covered under a Gratuity Trust and as detailed under Paragraph II 9 (c) of Schedule 18 above.

Gratuity: The components of net benefit expenses recognized in the Profit and Loss Account and Balance Sheet and the funded status for gratuity benefit plan are summarised below:



I Assumptions Mortality Indian Assured Lives Indian Assured Lives Mortality (2006-08) Mortality (2006-08) (modified) Ult. (modified) Ult. Discount Rate 9.25% 8.00% Rate of increase in compensation 9.50% p.a. for first year 9.50% p.a. for first year and 8.50% thereafter and 6.00% thereafter Rate of return (expected) on plan assets 7.5% 7.5% Withdrawal rates Up to age 30 - 34%, Up to age 30 - 34%, age 31-40 - 21% age 31-40 - 12% age 41-50 - 10% age 41-50 - 10% age 51 and above - 5% age 51 and above - 5%

II Changes in present value of obligations DBO at beginning of the Year 84,276 64,897 Interest Cost 6,494 5,340 Current Service Cost 9,630 8,286 Benefits Paid (6,201) (5,601) Actuarial Losses/(Gains) on obligation 16,305 11,354 Liabilities extinguished on settlements - - DBO at end of the Year 110,504 84,276

III Changes in fair value of plan assets Fair Value of Plan Assets at beginning of the Year 43,965 43,611 Expected Return of Plan Assets 3,214 3,061 Contributions 4,000 - Benefits paid (6,201) (5,601) Assets distributed in settlements - - Actuarial gain / (loss) on plan assets (137) 2,894 Fair Value of Plan Assets at end of the Year 44,841 43,965










IV Amounts to be recognised in the Balance Sheet Present Value of DBO at the end of the Year 110,504 84,276 Fair Value of Plan Assets at end of the Year 44,841 43,965 (Funded)/Unfunded Status (65,663) (40,311) Unrecognised Past Service Costs - - Net Asset /(Liability) recognised in the Balance Sheet (65,663) (40,311)

V Expense Recognised Current Service Cost 9,630 8,286 Interest Cost 6,494 5,340 Expected Return on Plan Assets (3,214) (3,061) Net Actuarial Gain /(Loss) recognised for the Year 16,442 8,460 Expense recognised in the statement of P&L A/c 29,352 19,025

The estimate of future salary increases, considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in employee market. The Gratuity Fund assets are invested in government securities, corporate bonds and other eligible investments. Major categories of Plan assets as a percentage of total plan assets.


Percentage

Government of India securities (Central and State) 16.78 17.04 High quality corporate Bonds (Including Public Sector Bonds) 70.77 72.06 Equity shares - - Cash (Including Special Deposits) 12.45 10.90 Others - - Total 100.00 100.00

Experience Adjustments As at 31st As at 31st As at 31st As at 31st As at 31st March, 2014 March, 2013 March, 2012 March, 2011 March, 2010 Defined Benefit Obligation at end of the period (110,504) (84,276) (64,897) (60,872) (44,818) Plan Asset as at the end of the period 44,841 43,965 43,611 50,926 53,616 Funded Status (65,663) (40,311) (21,286) (9,946) 8,798 Experience Gain/(Loss) adjustments on plan liabililites (6,423) (5,782) (7,095) (10,924) (618) Experience Gain/(Loss) adjustments on plan assets (137) 2,895 1,168 (2,021) (2,468) Acturial Gain/(Loss) due to change on assumptions (9,882) (5,572) (305) 1,417 Not Available

D Leave Encashment

The amount charged to Profit and Loss Accounts during the year towards Leave Encashment – Rs. 5,137 thousand. (Previous Year Rs. 17,057 thousand)The liability for leave encashment and compensated absences as on March 31, 2014 is Rs. 55,969 thousand (Previous Year Rs. 85,486 thousand).




12. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006:

During the year, there has been one instance of delay in payment, in excess of 45 days to Micro, Small and Medium Enterprises or of interest payments. The details of the same are as below:



1 Principal amount due remaining unpaid - -

2 Interest amount due thereon and remaining unpaid - -

3 Amount of interest paid in terms of Section 18 of the MSMED Act 2006 2 -

4 Interest due and payable (under the MSMED Act 2006) which have not been paid (covering all payments) - 2

5 The amount of interest accrued and remaining unpaid at the end of the accounting year (i.e. including amount brought forward from previous year) - 2

6 Details on payments made up to June 10, 2012 in respect of outstanding as at Sl. No. 1 above. - -

13. Details of fees / remuneration received in respect of bancassurance business:


Particulars 2013-2014 2012-2013

Others – Income from Insurance Referral Business 47,698 30,161

14. Disclosures on Remuneration:

Qualitative Disclosures

Being a Branch of a Foreign Bank, the Bank does not have any Remuneration Committee for approval of the Managerial Remunera-tion. The Bank’s compensation structure is in conformity with the principles and practices set out by the Financial Stability Board (FSB). Further, the Bank has obtained the RBI’s approval for the Chief Executive Officer’s (CEO) remuneration.

Quantitative Disclosures

The quantitative disclosures cover the Bank’s CEO and Key Risk Takers. The Bank’s Key Risk Takers include the CEO, Head of Business Units and select roles in Treasury and Risk.


SI No. Particulars 2013-2014 2012-2013

1 (i) Number of employees having received a variable remuneration award during the financial year. 5 5

(ii) Total amount of outstanding deferred remuneration, split into cash, shares and share-linked instruments and other forms. 103,607 49,191

(iii) Total amount of deferred remuneration paid out in the financial year 26,178 24,148

2 Breakdown of amount of remuneration awards for the financial year to show fixed and variable, deferred and non-deferred.

Fixed 32,783 35,083

Variable 54,380 37,979

Deferred 31,500 21,038

Non-deferred 22,880 16,942







SI No. Particulars 2013-2014 2012-2013

3 (i) Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and / or implicit adjustments. 82,839 38,247

(ii) Total amount of reductions during the financial year due to ex-post explicit adjustments. - -

(iii) Total amount of reductions during the financial year due to ex- post implicit adjustments. - -

4 Retirals (PF, Gratuity, SA) 2,411 4,183

15. Comparative figures

Previous year figures have been reclassified and regrouped wherever considered necessary to conform to current year’s presentation.

Signature to Schedules 1 to 18




Documents

AMERICAN EXPRESS BANKING CORP. · Act,1949 read with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013